Trade Bill

Lord Purvis of Tweed Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Tuesday 15th December 2020 Lords Chamber

[Baroness Jones of Moulsecoomb (GP) [V]]

My Lords, one of the things that has often been frustrating in your Lordships’ House in the seven years that I have been here is that we talk about incredibly important things, yet often our language is so obtuse and complex that, although we understand what we are talking about, other people outside do not. Therefore, a lot of these important issues do not get the sort of publicity that they ought to.

Following the noble Lord, Lord Hendy, is a mixed blessing. He gave a devastating outline of exactly why ISDS should not be any part of trade negotiations. At the same time, he has reduced my speech to ashes because that was exactly what I was going to argue. I honestly do not understand how any member of the Conservative Party can support the concept of not just countries but other corporations having any rights over our country. The mechanisms of ISDS are far worse than any charge that could be brought against the EU courts system. I do not understand how the Government think that it ISDS is reasonable.

The rule of law and the right to legal remedy are both important and are best served not by shady arbitration but openness and transparency and our legal court proceedings. The Minister should argue to everyone in his department that ISDS should not be any part of our trade negotiations. Your Lordships should now make it clear that we will reject any treaty that contains ISDS. The Government have made all sorts of promises about reclaiming sovereignty, but how on earth can they claim with straight faces that ISDS is an appropriate mechanism to put in any trade Bill.

While I have the Floor, I should like to say that the Minister in the previous group said something about the Bill being a useful mechanism for fighting climate change. The noble Viscount, Lord Trenchard, mentioned lifting other countries out of poverty through trade. Perhaps he could do something about that in Britain and start lifting out of poverty the millions of people who are on, below or close to the poverty line. There must be some mechanism that this Government could use. In any case, the whole concept of ISDS should be thrown out as fast as possible.

[Lord Purvis of Tweed (LD)]

My Lords, my noble friend Lady Kramer moved this amendment very ably and indicated that, because of the cross-party support and the degree of consistency with Amendment 19, she would be minded to test the opinion of the House. So I will be brief, because I suspect that the only service I could bring would be to undermine her arguments if I speak at length.

I want to pick up on one point. I agree with others that the noble Lord, Lord Lansley, provides us with a service to make sure that we are as on the ball as we can be with regard to making our case. My noble friend’s point about Canada is illustrative in trying to find out what the Government’s intention is for the long term for the replacement of ISDS.

We already know two things. The Minister said at Second Reading:

“ISDS is a subject which often causes excitement … I confirm that ISDS tribunals can never overrule the sovereignty of Parliament … There has never been a successful ISDS claim against the United Kingdom, but our investors operating overseas have often benefited from these agreements”.—[Official Report, 8/9/20; col. 749.]


He gave the impression that the Government’s position is that they are, at the very least, relaxed about ISDS being in agreements, and that they would not seek to move to a multilateral system as a replacement for ISDS.

The second thing we know is that, since 2008, after the European Council made the decision for the EU policy to move beyond ISDS, it has systematically sought to include provisions in agreements going forward; those can include changes to the ISDS mechanism and having a different form of tribunal process. Further, as the EU-Canada joint statement with the signing of CETA said:

“The EU and Canada commit to join efforts with other trading partners to set up a permanent multilateral investment court with a standing appellate mechanism.”


The issue then is: what was in CETA? We know that the changes to CETA included a right to regulate by both parties—the European Union and Canada—across all levels of government, regardless of investment protection; that there would be a clear break from an ad hoc arbitration system and a move to a permanent and institutionalised dispute settlement tribunal; and that members of the tribunal would no longer be appointed by the investor or the state but would instead be appointed in advance in a neutral manner.

My noble friend asked what the Government’s position is regarding the UK replacement for CETA; this is illustrative of where the Government are, going forward. Inevitably, the Minister was not able to share that information in Committee but, as the noble Lord, Lord Lansley, indicated, we have now seen the text of the agreement. It is very interesting. As has been referred to, page 103 of 109 lifted our hopes against the noble Lord’s fear that we would not be in a position to move to a multilateral system. It states:

“Therefore, the TCA represents an important and radical change in investment rules and dispute resolution. It lays the basis for a multilateral effort to develop further this new approach to investment dispute resolution into a Multilateral Investment Court. The United Kingdom and Canada will work expeditiously towards the creation of the Multilateral Investment Court. It should be set up once a minimum critical mass of participants is established, and immediately replace bilateral systems such as the one in TCA, and be fully open to accession by any country that subscribes to the principles underlying the Court.”


That was reassuring from our point of view and it gave a signal, but there is a sting in the tail: this is subject to a comprehensive review within three months. If the noble Lord, Lord Lansley, is correct—he often is—the Government will have acceded to what Canada wanted but are holding their position. They are holding their position for this review so that they are not in a position where, effectively, they will have their sovereignty restricted because they know that, in entering into the CPTPP or any agreement with America, their partners will not be in favour of moving to a multilateral system.

Perhaps this is just like some of the other discussions taking place now. There is what the Northern Ireland announcement called a grace period. There is a grace period for the agreement for moving to a multilateral system, as in our amendment, but the Government are trying to triangulate. The Government need to be clear, because this cannot go on for much longer. The amendment moved so ably by my noble friend Lady Kramer is an opportunity for the Government to be clear. This is such an important issue, which is why we want to press the amendment: to get clarity from the Government.

At this stage, if the Minister can respond clearly on Canada, that would be a reassurance, but it does not negate the issue. The noble Lord, Lord Lansley, made the point that this amendment is perhaps unnecessary; the text of the UK-Canada agreement and the review means that this amendment is even more necessary to replicate in this Bill what the Government indicated in the UK-Japan agreement.

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Moved by

[Lord Purvis of Tweed]

16: After Clause 2, insert the following new Clause—
“Prohibition of tied aid in trade and procurement
(1) The United Kingdom may only become a signatory to an international trade agreement with a Least Developed Country or a Lower Middle Income Country and Territory if the conditions in subsection (3) are satisfied.(2) The Secretary of State may not lay a copy of an international trade agreement with a Least Developed Country or a Lower Middle Income Country and Territory before Parliament under section 20(1) of the Constitutional Reform and Governance Act 2010 unless the conditions in subsection (3) are satisfied.(3) The conditions are –(a) the United Kingdom commits in the agreement to complying with the Recommendation on Untying Official Development Assistance as adopted by the OECD Development Assistance Committee (DAC) on 25 April 2001, and as amended;(b) no provision of the agreement is subject to a condition restricting the state the United Kingdom has made the agreement with from receiving aid other than those as agreed under the principles of the Recommendation; and(c) the United Kingdom, so far as reasonably practicable, has committed that there will be no significant impediment in the purchasing process of goods or services from the United Kingdom which would have the effect of a narrower restriction than that on the states from which goods or services will be purchased by the United Kingdom using aid.(4) If the conditions in subsection (3) are not included in an international trade agreement made before this Act comes into effect, no regulations can be made under section 2(1) to implement the agreement.(5) The Secretary of State must include in the annual report required under section 1 of the International Development (Reporting and Transparency) Act 2006 (annual reports: general) a statement on how the UK has met its commitments under subsection (3).(6) The Secretary of State may not make regulations under section 1 which are inconsistent with the OECD DAC Good Procurement Practices for Official Development Assistance.(7) The requirements relating to trade and aid on the Secretary of State in this section are in addition to the duties as required in the International Development Act 2002, the International Development (Reporting and Transparency) Act 2006, the International Development (Gender Equality) Act 2014, and the International Development (Official Development Assistance Target) Act 2015.(8) In this section, the definition of aid includes support for—(a) balance of payments and structural adjustment support;(b) debt forgiveness;(c) sector and multi- sector programme assistance;(d) investment project aid;(e) import and commodity support;(f) commercial services contracts; and (g) overseas development assistance to Non-Governmental Organisations for procurement related activities.”

[Lord Purvis of Tweed (LD)]

My Lords, in moving Amendment 16 I will speak to Amendment 25. Before I do so, it would be churlish of me not to congratulate the Minister on a victory on Report. I half expected him to move to adjourn and quit while he was ahead.

I tabled these amendments with a degree of regret. They should be unnecessary, but I am grateful to noble Lords who indicated that they would participate in this group, including my noble friends Lady Sheehan and Lord Bruce. Amendment 16 would put on a statutory footing a prohibition on tied aid, and Amendment 25 seeks to prevent economic disruption for some of the least-developed countries should the UK fail to agree continuity agreements at the end of December.

I mention regret because one of the reasons for tabling Amendment 16 was to respond to some statements that the Chancellor and the Foreign Secretary made recently on what I believe is a shameful decision to breach the UK’s obligations under the 2015 overseas development target Act to meet its commitment to spend 0.7% of GNI on overseas development assistance. When that announcement was made, the Foreign Secretary also highlighted certain forthcoming reforms to assistance away from the legislative basis in the 2002 Act, under what is potentially a repeal of the 2015 Act.

My regret was also about the fact that we should not need to try to put into legislation commitments that Ministers have made. I am pleased that the noble Baroness, Lady Noakes, is following me because she has repeatedly made that argument. I think that we have a genuine disagreement on this—while not necessarily in principle then certainly in balance. We sometimes take Ministers’ statements, accept their word and believe their intentions, and that does not necessarily have to be reflected in legislation. But there are also times when we wish to restrict a Government, regardless of any individual incumbent Minister or position and regardless of which party forms the Treasury Bench in the Government.

However, commitments on ODA and on our trading relationships with the least developed countries have been made repeatedly this year in the teeth of the Covid crisis, both previously and more recently. The Minister for Africa, James Duddridge, said in June that it is the law for us to meet 0.7% and we—meaning the UK—will obey the law. In July, the Foreign Secretary said that we remain committed to 0.7%, and in September the noble Lord, Lord Ahmad, said to the global NGO community in Geneva that we reaffirm our commitment. However, we now know that the Government no longer take that position.

The UK has adopted a convention and approach regarding tied aid since the OECD Development Assistance Committee introduced the principles against tied aid in the early 2000s. A number of commitments are reflected in the amendment and I do not need to rehearse them—I hope that the amendment speaks for itself regarding the obligations that we feel the Government should be bound by. I am sure that my noble friends will give egregious examples of assistance which should have been directed towards the most vulnerable and the poorest in the world having been used to advance British commercial interests—indeed, tying the assistance to those commercial interests.

The UK has been, and still is, a leader in that approach. We represent the top tier within the OECD for not having tied aid. Repeatedly and consistently, more than 90% of our overseas aid is not tied in any way, shape or form, and indeed the remainder comes within a degree of justifiability, which the OECD DAC already allows for.

So that begs the question: why would we seek to put into legislation the commitments that we have made and honoured? I repeat that it is because, unfortunately, we have seen commitments given by this Government but not necessarily adhered to. I hope the Minister can reassure the House that there is an absolute commitment that the UK will not renege on any of the OECD standards on tied aid and that we will maintain our high standing. It would be a very retrograde step if, while cutting our overseas aid around the world by a third over the next year, we also attached conditionality to the remainder for commercial interests. I hope that the Minister can be categorical on this.

I give the Minister notice that for me, this is a very strong issue. We know that the Bill will come back to us in the first week of January, so I am aware that if I seek the opinion of the House on Amendment 25, it will be after the 31 December break point. On the issue that the amendment seeks to raise—the Minister knows that I sought to speak to him about it—I hope that the Government can be persuaded to act at this eleventh hour to avoid unnecessary, possibly devastating impacts on exporters from Ghana and Cameroon in particular. We have tried to frame the amendment so that it captures both. Regardless of the exact drafting of the amendment, I hope that the Minister can understand its thrust.

In Committee—I think in a debate that the noble Lord, Lord Lansley, and I took part in on the global scheme of preferences—concern was expressed about Kenya, Ghana and Cameroon in particular. An agreement in principle with Kenya, although problematic with its regional partners, has been made and I welcome that, but the concerns about Ghana and Cameroon remain. I am aware of certain developments since I tabled the amendment. We were looking at the very bleak situation of Ghana and Cameroon trading on the previous basis and then on a potentially worse set of tariff procedures than under the EPA relationship.

With regard to Ghana, I understand that the UK has now agreed to use a regional text as a basis for negotiations. I understand that that had not been the case prior to very recent developments. Therefore, the current focus on looking at a holding mechanism between the UK and Ghana that will allow for a regional trade framework to be put in place could well be the means of moving away from the precipice of 31 December. The aim for agreement by the end of this year will, I think, be encouraged by most Members of the House, but of course we will have to see the detail, particularly regarding the liberalisation commitments in Ghana, which had been a concern. Therefore, I hope that the Minister can make it clear that there will not be a cliff edge for Ghana.

Turning to Cameroon, I understand that on the outstanding rules of origin issues, there have been holding arrangements for four months rather than three, to allow for a resolution of final issues—perhaps similar to the compromise recently reached for Northern Ireland. Can the Minister confirm my understanding of that?

Therefore, it looks as though there has been progress, but I want to close by giving one brief example of why this issue is important, not only for those working within fair and open trade in Ghana and Cameroon but for British consumers. On a recent visit to my nearest Sainsbury’s in Kelso in the Scottish Borders, I looked at the fruit department and saw bananas from Ghana. Thursday of this week will be the deadline for exporters of bananas from Ghana. Shipments of bananas and pineapples have been processed and are ready to be shipped from Tema to the United Kingdom. Those exporters do not know the value of that cargo because they do not know what the tariff and border arrangements are for the following week. The deadline for them is Thursday of this week, so it is very important for the Minister to give a strong reassurance on that. Tuna exports have now ceased. They are cargoed and at Tema port, and there is also uncertainty regarding those exports.

At the very least, if any British consumers wish to buy fair trade bananas from their supermarkets or fruit and vegetable stores, or indeed fresh tuna, they might, through the example I have given, become aware of the dual consequence of a lack of government assurance. If the Minister is able to provide reassurance today, that will give exporters a degree of confidence. They will be able to proceed on the basis of the Minister’s commitments and then provide that information to customers in the UK so that there is no disruption. I hope that the Minister is able to provide that information. I beg to move.

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[Lord Grimstone of Boscobel (Con)]

My Lords, I thank the noble Lord, Lord Purvis, for raising the important issues of trade and international development. I am well aware of his deep commitment to this topic, and I admire the integrity with which he pursues it. I am pleased to say that the Government share his commitment to supporting international trade, prosperity and poverty reduction, and I am happy to explain the Government’s policy on this topic.

The Government have a proud history of providing official development assistance in such a way as to achieve maximum impact on reducing poverty in developing countries, including through helping to build their capability to trade. The International Development Act 2002 requires that overseas development assistance is provided only for the purposes of furthering sustainable development of a country outside the UK or for improving the welfare of the population of such a country. I unequivocally assure all noble Lords who have raised the point that the Government are committed to providing international aid untied to commercial conditions. That ensures that international aid spending is procured through open competition to achieve best value for money. The UK’s approach in this area is published in the 2015 UK aid strategy and further set out in the UK Official Development Assistance: Value for Money Guidance. The Foreign Secretary reaffirmed this commitment in the other place on 26 November. Through these provisions, the Government’s approach to international aid is wholly consistent with both sets of OECD guidelines on official development assistance to which this amendment refers. I am happy to give the noble Lord, Lord Purvis, and other noble Lords a categoric reassurance that we have no plans or intent to change that.

I turn to Amendment 25. The Government, of course, share the desire of the noble Lord, Lord Purvis, to support trade with developing countries. We have engaged wholeheartedly with our developing country partners to secure economic partnership agreements that provide continuity of their market access. As has already been noted by noble Lords, I am pleased to inform the House that Kenya and the Ivory Coast have recently agreed economic partnership agreements with the UK, which will provide long-term certainty of their duty-free market access and provide a framework to develop our trade relationships in future.

We began discussing an economic partnership agreement with Ghana no less than three years ago, and we encourage Ghana to conclude those discussions to maintain our existing trade arrangements, including its duty-free access. I ask noble Lords to join me in that encouragement: we want to conclude an agreement with Ghana, and I give it that message loudly and clearly. On Cameroon, we are committed to securing an EPA. Further discussions continued as recently as last week and, again, I encourage that country to reach an agreement with us as soon as possible.

Further, I clarify that the Government’s long-stated policy is to replicate the effects of the EU’s generalised scheme of preferences, or GSP, and then in due course to go beyond it. This arrangement supports trade with around 70 developing countries; it increases global prosperity and reduces poverty while providing access to cheaper products for UK consumers. The most appropriate way in which to ensure continuity of this vital trade arrangement is to replicate the existing trade preference scheme, which is already known to be compatible with WTO rules, and regulations to create the GSP will be laid in Parliament shortly.

I absolutely took the point made by my noble friend Lord Lansley about the optimum arrangements for the future, and I will ensure that his comments are passed on. Transitioning the existing EPAs is absolutely not the limit of the Government’s ambition in the area, and in the future we will look at how we can improve on these structures. Regarding proposed new subsection (2) in Amendment 25, introducing any changes to the eligibility criteria of the UK GSP at this point creates risk and uncertainty for the remaining 70 countries of the UK GSP, which I am sure noble Lords wish to avoid.

Regarding proposed new subsection (3), which proposes removing the tariffs on bananas for countries in the UK GSP’s enhanced framework, I urge caution. Although this could provide a way to maintain Ghana’s duty-free access to bananas, it would also extend this preferential access to the other countries in the enhanced framework. Some of them are already competitive banana producers and could increase their exports of bananas to the UK at the expense of existing banana producers, many of which are Commonwealth partners in the Caribbean. Such a proposal cannot be rushed. It must be based on careful analysis. For that reason, it cannot be accepted now.

I hope that your Lordships agree that there is a balance to be struck. While of course I share the concerns of the noble Lord, Lord Purvis, about the impact of a potential loss of duty-free access for Ghana if the worst comes to the worst, this amendment to the UK’s generalised scheme of preferences could have negative consequence on other countries’ trade relationships with the UK. I reassure noble Lords that if Ghana does not agree an EPA—I sincerely hope that it will—it will still receive tariff reductions on two-thirds of its product lines through the general framework of the UK GSP. Ghana can also apply for the enhanced framework of the UK GSP, which provides further trade preferences.

I am genuinely grateful to the noble Lord, Lord Purvis, for raising these important issues. I hope that I have clarified for him and other noble Lords who have spoken the wider consequences of the amendment. I also hope that I have reassured him and other noble Lords on the Government’s policy to not tie overseas development assistance to procurement or trade from the UK, in line with international guidelines. I hope therefore that noble Lords agree that this amendment is unnecessary, and that the noble Lord agrees to withdraw it and not bring it forward on the later occasion.

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to noble Lords who have participated in this short debate, which has focused on longer-term issues rather than more immediate ones. I am very grateful for the Minister’s response, his kind remarks, and the courtesy with which he carries out his work. My noble friend Lord Bruce and the noble Earl, Lord Sandwich, addressed very clearly the point made by the noble Lord, Lord Lansley, and to some extent, that of the noble Baroness, Lady Noakes. I took the 2015 Act through this House on behalf of my then right honourable friend Michael Moore in the House of Commons. I refer to the subsequent Conservative Party manifesto, its 2017 and 2019 manifestos, and what has been said by every Conservative Minister from the passing of that commitment until three weeks ago. The noble Lord, Lord Lansley, asked whether the amendment was going to prevent the Government doing something that he said they were not going to do. Well, every statement from Ministers and three manifesto commitments has been breached.

Therefore, I hope that noble colleagues will forgive me for laying down a marker to indicate that the connection between trade and development is real. It may be that if, as the noble Baroness, Lady Noakes, has indicated, the Government bring forward repeal or significant amendments to the 2015 Act or, indeed, the 2002 Act, we will consider it then. I hope, of course, that they do not.

The noble Lord, Lord Lansley, made the point about blurring the lines, perhaps, between development priorities and trade priorities. He asked specifically about the drafting of the amendment. It is a fair question. I tried to blend the categories in the list at Part 3 of Schedule 3 to the Taxation (Cross-border Trade) Act 2018, which defines the countries that we will have, with what a trade agreement amendment would be—because as we know, the tied aid goes beyond trade agreements—but, of course, there are elements to be debated going forward. I hope we will not need to debate these. I think that the noble Baroness, Lady Noakes, is right. I hope that what the Government say about having no plans for change will be right. I believe that the Minister has a very high degree of integrity and I am very grateful for the explicit and categorical assurances, and therefore I shall not press Amendment 16.

On the most immediate point, I am grateful for the Minister’s response. I was hoping that he might be in a position to confirm the movement that I understand has been made, because while I freely admit that my amendment is only one option—the noble Baroness, Lady McIntosh, indicated other options and the Minister has indicated certain other areas; we might need to approach this in a different way—the principle is the same. Agreements have not been made. I hope that they will be, but if they are not within a week’s time, assurances need to be made for goods that are in port now, ready to come to the UK from some of the least developed countries in the world. I am glad that the Minister has given reassurance, and I hope very much that we will not need to come back to this after January, because this is now a real, live test that needs to be resolved so that the people paying the price for the end of the transition period are not the people working in some of the least developed countries in the world. However, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.